Wednesday’s action was a case of defeat snatched from the jaws of victory. The S&P 500 opened trading up 1.2%, but by the end of the day, it had lost all of its gains, finishing down nearly 0.8%.
Volatility is back, and that could be excellent news for troubled stocks such as VF Corp. (VFC), which are garnering more attention as investors avoid some of the more prominent names that have attracted more selling pressure than usual in recent days.
Yesterday, VFC stock had a hectic day with a share volume of 17.4 million, 1.9x its 30-day average, options volume of 95,204, 3.7x its 30-day average, and five unusually active options, an indication that it’s time for investors to revisit the beleaguered stock.
Here are three reasons why.
VFC Stock Up 60% Since May Low
On May 23, VFC hit a 52-week low of $11. Its share price has risen by 60% in the seven weeks since. Kudos to those who bought at the bottom. You have nerves of steel.
The thing is, as recently as December 2019, VF stock traded over $100. There is plenty of upside ahead if its turnaround can continue to gain traction.
Looking at its daily options volume over the past three months, it has had 90,000 or more options traded just twice, and both of these were traded yesterday and Tuesday. It looks to be another good day early in pre-market trading, but as we saw yesterday, things can change in a heartbeat.
So, why is VF’s stock up 60% since May? It’s a combination of things.
First, the news on July 17 that it was selling its Supreme streetwear brand to EssilorLuxottica (ESLOY) for $1.5 billion—it paid $2.1 billion for the brand in late 2020—was an indication of just how far CEO Bracken Darrell was willing to go to get VF back on track.
“Given the brand’s distinct business model and VF’s integrated model, our strategic portfolio review concluded there are limited synergies between Supreme and VF,” Fortune reported Darrell’s comments from July.
The company has four key brands: Vans (30.5% of $1.91 billion in Q1 2025 revenue), North Face (27.4%), Timberland (12.0%), and Dickies (6.1%). Its other brands account for the remaining 24%.
By shedding Supreme, Darrell can more easily focus on these four brands. I wouldn’t be surprised if other brands that make up the 24% are also sold off.
Secondly, it reported better-than-expected Q1 2025 results on Tuesday, including sequential revenue improvements across all its brands. The company’s Reinvent program is working.
But it’s not entirely out of the woods just yet.
Vans Has a Lot of Work to Be Done
Until the past year, Vans was the company’s star brand, generating significant revenue and profits. In Q1 2025, the brand’s revenue declined 21%, from $738 million in Q1 2024 to $582 million in the latest quarter. As a result, The North Face is within spitting distance of Vans regarding revenue.
To help revive Vans’ fortunes, the company hired Michelle “Sun” Choe as Vans’ global brand president at the end of May. Choe is the former Chief Product Officer of Lululemon (LULU), a company known for product innovation. Vans needs that in a big way.
“[Choe is] a strong leader who is focused on consumer insight and has a proven track record of driving brand heat, and translating it into financial results,” Darrell said about the hiring.
Analysts approved of the hiring. Wedbush Securities raised its price target by $1 to $11, and it’s blown through that.
Vans has lost its edge in its largest market, the Americas. In Q1, Vans’ Americas revenue declined by more than 25%.
Much of Lululemon’s revenues are generated in the U.S. and Canada. Choe should understand what it takes to grow a footwear brand in the region. As Chief Product Officer, she was very involved in the launch of LULU’s women’s footwear in March 2022 and its men’s footwear in February.
It’s an intelligent hire that should pay dividends in the second half of fiscal 2025 and into 2026.
Change Is Good
A lot has changed since Darrell became CEO on July 17, 2023. The CEO discussed some of those changes in the Q1 2025 analyst call. The addition of Choe is just one of the many changes he’s made.
As I wrote in 2023 about Darrell, he generated a 681% cumulative return for Logitech (LOGI) shareholders in the 10.5 years he was CEO of the computer accessories company. I thought he was a good hire back then, and all his recent moves suggest I wasn’t wrong.
On the call, the CEO reminded analysts that the company generated $50 million in cost savings in the first quarter and will have delivered $300 million in annual cost savings by the end of the second quarter.
Further, it reduced inventories by 24% from Q1 2024 and lowered net debt by $587 million as it continues to strengthen its business and its balance sheet. With the sale proceeds from Supreme later in the year, it will considerably reduce its debt levels, with free cash flow generation accelerating due to all these efforts.
Darrell turned around Logitech; I expect he’ll do the same with VF.
The Bottom Line
As I said in the intro, VFC had five unusually active options on Wednesday, four of which were calls and one put.
Three of the five expire in eight days so that I won’t consider these.
That leaves the Sept. 20 $20 call and Jan. 17/2025 $25 call. The former’s ask price of $0.43 is a 2.2% down payment on the shares, and the latter's ask price of $0.55 is also a 2.2% down payment.
I like the $25 strike because it gives you an additional 120 days on your bet for only $12 more. The last time VFC stock traded around $25 was in March 2023, 17 months ago.
On the date of publication, Will Ashworth did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
